Archive for the ‘repaid’ Category

That is probably why Las Vegas Mayor Oscar Goodman proposed a $60 million mob museum be included in the Obama stimulus plan.

School economics is one thing. Street economics is sometimes the same and sometimes different.

The New President and the Congress are now talking about the biggest “rescue” or “stimulus” or “bailout” of the economy in the history of the world. The deal is financed by “government spending” which is really borrowed money which is debt.

Or we just print more money which means inflation and the money is worthless.

When America borrows, who pays? First, I guess, and correct me if I’m wrong, China lends the money to the U.S.

China already “owns” as of October, 652.9 billion dollars in US Treasury bonds.

Now President-elect Barack Obama has proposed a stimulus bill expected to total at least 775 billion dollars that he has acknowledged would drive the US deficit significantly higher — and require financing from overseas.

Actually, as David Gregory said on NBC’s “Meet the Press” on Sunday, the total “bailout” is going to be $2 Trillion from late 2008 until the end of 2009.

And China has already signaled that is may slow the rate of funding U.S. debt, stimulus, rescue and other shenanigans by any name.

Why? China wants to solve its own economic problems first and China is starting to doubt that American can repay.

Why? To repay the debt, the average U.S. worker, at some time in the future, will have to earn a lot more and pay a lot more in taxes. The tax debt per family will exceed $20,000.

But what will Americans DO to earn more? Make cars at GM? Hardly. About 70% of our American economy is consumer spending. So we tax store clerks more?

So, to put this in the most basic terms: the U.S. is borrowing huge amounts of dough from the mafia. There is some doubt that it can be paid back. If it doesn’t get paid back the pay-back price will increase. Finally, if it doesn’t get paid back, “they own you” or “they break your legs.”

So China will own the U.S.

Or break our legs. Or balls.

Someday, maybe, America will have to make a concession. Give up some oil? A chunk of land? Taiwan? Guam? Something we really think is important….

Addressing these assets was the original purpose of the Troubled Asset Relief Program, the formal name of the $700 billion bailout plan the Bush administration unveiled as the credit crunch spun out of control. It was later abandoned in favor of taking equity stakes in banks, which was seen as a more direct and rapid way to help.

But as the economy worsens and banks continue to rack up multi-billion dollar losses, the incoming Obama administration will face tough choices in deciding what to do with the $350 billion remaining in the bailout plan. There are many who want a piece of the pie, and there may not be enough money to go around.

One critic of the stimulus is Rep. Jerry Lewis from California.
.
“We have serious concerns about its size, scope, and astronomical cost,” said Representative Jerry Lewis, the top Republican on the Appropriations Committee. “This legislation appears to blanket government programs in spending with little thought toward real economic results, job creation, or respect for the taxpayer.”

The spending plan would add to the $1.2 trillion deficit the government was already projected to run this year.

Barack Obama and his congressional allies are gambling that the largest public spending program since World War II and a new round of tax cuts will pry the economy from the recession’s iron grip and avert another Depression.

But what if they’re wrong?

Some conservative economists say the additional stimulus might only prolong the grief at best, triggering runaway inflation down the road and resulting in an even more bloated bureaucracy.

“I think the economy will recover regardless of what Washington does. But the long-term effect here will be to reduce the standard of living of the next generation because they will be saddled with all this debt,” said Chris Edwards of the libertarian-leaning Cato Institute.

Even without the new spending proposed by Mr. Obama, the U.S. has a $1.2 trillion budget deficit this year, he noted. “If that isn’t already enough of a Keynesian stimulus, what is?”

Early 20th-century British economist John Maynard Keynes argued that government should intervene to avoid depressions by increasing its spending and controlling interest rates. President Franklin D. Roosevelt based many of his New Deal spending initiatives on Keynesian theory.

The skeptics offer this as Exhibit A: The trillions hurled at the problem last year by Congress, the Bush administration and the Federal Reserve have yet to yield many tangible results.

In short order last week, Congress cleared the way for a new $350 billion installment of bailout cash for the financial industry while House Democrats rolled out details of a $825 billion two-year stimulus package.

Allen Sinai, the president of Decision Economics, a financial consulting firm, said even with Mr. Obama’s aggressive spending program, the economy seems unlikely to show a true recovery this year in terms of sustainable gains by consumers and businesses.

“There are forces going on that are 1930s-like,” he said. “There is incredible asset deflation, a huge loss in wealth by households. In the ’30s, even when funds became available from the financial system to borrow, the pessimism by consumers and businesses was so great that no one wanted to spend.” He wouldn’t rule out a repeat of that mind-set.

Some economists who are not fans of Keynesian economics or stimulus packages argue that FDR’s New Deal, highly touted today as a model for job creation, did little to spur a U.S. recovery.

“It was finally World War II that finally ended the Great Depression,” said Bruce Bartlett, a White House economist in the Reagan administration and a top Treasury official in the first Bush administration. He is the author of a study that says nearly all postwar stimulus packages passed by Congress came too late to be of much help, and just increased the deficit and fueled inflation

Mr. Obama shrugs off the skepticism and casts his stimulus package as the right formula for creating long-lasting, well-paying jobs, despite its big cost.